The world’s 10th largest economy, Canada, posted a second consecutive trade surplus in June, despite declining exports.
Official data released from Statistics Canada on Friday showed that Canada’s trade surplus narrowed to $136 million CAD in June. This followed a trade surplus of $762 million CAD in May, which was later revised down to $556 million CAD.
June’s trade surplus meant that this was the first time that Canada had recorded a consecutive trade surplus since November and December of 2016. However, analysts had expected a trade surplus of $300 million and the Canadian Dollar closed down on Friday, hovering near a six week low against its US Dollar cousin.
The narrowing of the trade surplus was attributed to a decline in both imports and exports, with decreasing trade seen in Crude Oil, aircraft and other transportation-related machinery.
Altogether, exports declined 5.1% to $50.3 billion on the back of a 3.6% decline in export prices. Crude oil exports, essential to the Canadian economy, plummeted 8.6%, the first decline of 2019. At the same time, crude oil value globally declined by 13.5% whilst volumes in Canada actually increased by 5.6%
A decline in orders from the US saw aircraft-related equipment and parts exports plunge 40.8 %. However, overall second-quarter aircraft exports rose 39.4% compared to the previous quarter.
Toronto-Dominion Bank senior economist Brian DePratto said:
“Volatility seems to be the name of today’s game, just as aircraft and a few other noisy categories helped deliver a robust May report, they were key factors in the more muted report today.”
Brian DePratto
Canada’s Declining Exports to the US
A total of 74.8% of Canada’s goods exported to the US in June. Exports to the United States dropped 3.9%, primarily due to the decline in crude oil, whilst imports from the US fell by 3.8%. Consequently, Canada’s trade surplus with the US, the world’s largest economy narrowed to C$5.7 billion in June from the C$5.9 billion recorded in May.
